<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INTERNATIONAL RECTIFIER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
INTERNATIONAL RECTIFIER CORPORATION
233 KANSAS STREET, EL SEGUNDO, CA 90245 (310) 322-3331
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 25, 1996
---------------------
The Annual Meeting of Stockholders of INTERNATIONAL RECTIFIER CORPORATION
will be held on Monday, November 25, 1996 at 10 o'clock a.m. Pacific Standard
Time at the HEXFET America facility of the Company at 41915 Business Park Drive,
Temecula, California.
The meeting will consider and act upon the following business:
1. Election of three Directors.
2. Proposed Amendment to and Restatement of the Company's Stock Option Plan
of 1992 (Amended).
3. Ratification of Coopers & Lybrand as independent auditors of the Company
to serve for fiscal year 1997.
4. Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on September 27, 1996
as the record date for determining those Stockholders who will be entitled to
vote at the meeting.
By order of the Board of Directors
Gerald A. Koris
Secretary
October 11, 1996
IMPORTANT: PLEASE FILL IN DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE
POST-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO
EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
<PAGE>
PROXY STATEMENT
GENERAL
The accompanying Proxy is solicited by the Board of Directors of
International Rectifier Corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on November 25, 1996 and any adjournment
thereof. The close of business on September 27, 1996 has been fixed as the
record date for the determination of Stockholders entitled to notice of and to
vote at the meeting. This Proxy Statement and the accompanying Proxy will be
first mailed to Stockholders on or about October 11, 1996.
Any Stockholder who gives a Proxy has the power to revoke it at any time
before it is exercised by delivery of written notice of revocation to the
Secretary of the Company prior to commencement of the Annual Meeting.
Stockholders attending the Annual Meeting may vote their shares in person
whether or not a Proxy has been previously executed and returned. The Company
will bear the cost of solicitation of proxies.
The record date for the determination of Stockholders entitled to notice of
and to vote at the meeting is close of business on September 27, 1996. As of
September 27, 1996 there were 50,933,932 shares issued and outstanding of $1.00
par value Common Stock of the Company, the only class of voting securities
outstanding. Each share of Common Stock of the Company is entitled to one vote;
there is no cumulative voting.
Votes cast by proxy or in person at the Annual Meeting will be counted by
the persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will treat shares represented by Proxies that
reflect abstentions or include "broker non-votes" as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions will be counted toward the tabulation of "votes cast" and will have
the same effect as negative votes. "Broker non-votes" do not constitute a vote
"for" or "against" any matter and thus will be disregarded in calculation of
"votes cast". If a broker or nominee has indicated on the Proxy that it does not
have discretionary authority to vote certain shares (i.e., "broker non-votes"),
those shares will be treated as not present and not entitled to vote with
respect to that matter (even though those shares may be considered entitled to
vote for quorum purposes and may be entitled to vote on other matters).
2
<PAGE>
SECURITY OWNERSHIP
The following table shows, as of September 27, 1996, the beneficial
ownership of the Common Stock by owners of more than five percent of the Common
Stock, by each director or nominee, and by all directors and executive officers
as a group.
<TABLE>
<CAPTION>
AMOUNT
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT OF CLASS
- --------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
Jennsion Associates ..................................... 5,162,000 10.13%
466 Lexington Avenue
New York, NY 10017
Prudential Insurance Co. of America ..................... 4,616,200 9.06%
751 Broad Street
Newark, NJ 07102
Eric Lidow(2)(3)......................................... 2,478,822(1) 4.87%
Alexander Lidow(2)(3).................................... 1,147,658(1) 2.25%
Derek B. Lidow(2)(3)..................................... 633,955(1) 1.24%
Donald S. Burns(3)....................................... 23,000(1) *
George Krsek(3).......................................... 50,000(1) *
Robert J. Mueller(3)..................................... 46,000(1) *
James D. Plummer(3)...................................... 17,000(1) *
Jack O. Vance(3)......................................... 60,900(1) *
Rochus E. Vogt(3)........................................ 52,000(1) *
All Directors and Executive Officers as a Group (10 4,525,450(1) 8.88%
persons)...............................................
</TABLE>
- ------------------------
* Less than 1%
(1) Amount includes 280,000 options exercisable under Company's stock option
plans by executive officers and directors, in the aggregate, on or within 60
days of the record date.
(2) There are 41,826 shares owned by the Lidow Foundation of which Messrs. Eric
Lidow, Alexander Lidow and Derek B. Lidow are directors. Members of the
Lidow family other than Messrs. E. Lidow, A. Lidow and D. Lidow are the
beneficial owners of 190,241 shares. The Messrs. Lidow disclaim any
beneficial ownership in any of such shares. The 4,450,676 shares
beneficially owned by members of the Lidow family constitute 8.74% of the
shares outstanding.
(3) Business Address: 233 Kansas Street, El Segundo, California 90245.
3
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
There are nine directors on the Company's Board. The directors are divided
into three classes, and the directors in each class serve three-year terms
expiring in successive years. At the 1996 Annual Meeting, the term of office of
Class Two expires, and three directors are expected to be elected with terms
expiring upon the election and qualification of their successors at the 1999
Annual Meeting of Stockholders.
It is intended that Proxies received by the Board of Directors will be voted
for the election of the nominees for directors named below, unless authority to
do so is withheld. Messrs. Alexander Lidow, Robert J. Mueller and Rochus E.
Vogt, the nominees, are at present directors of the Company. It is not
contemplated that any nominee will be unable to serve as a director, but if that
contingency should occur prior to the Annual Meeting, the holders of Proxies
reserve the right to substitute and vote for another person of their choice.
The affirmative vote of holders of a majority of shares of the Company's
Common Stock represented at the meeting in person or by Proxy is required to
elect any nominee for director.
NOMINEES FOR DIRECTORS
The following persons are nominees for director with terms expiring in 1999.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- -------------------------------- --- ---------------------------------------------------------------- -----------
<S> <C> <C> <C>
CLASS TWO
TERM ENDING 1999
Rochus E. Vogt.................. 66 R. Stanton Avery Distinguished Service Professor and Professor 1984
of Physics, California Institute of Technology
Robert J. Mueller............... 67 Executive Vice President-External Affairs 1990
and Business Development of the Company
Alexander Lidow(1).............. 41 Chief Executive Officer of the Company 1994
- -------------------------------------------------------------------------------------------
CLASS THREE
TERM ENDING 1997
Eric Lidow...................... 83 Chairman of the Board of the Company 1947
Donald S. Burns(2).............. 71 President, Chairman of the Board and Chief Executive Officer, 1993
Prestige Holding, Ltd.
James D. Plummer................ 51 John M. Fluke Professor of Electrical Engineering and Director 1994
of the Stanford Nanofabrication Facility, Stanford University
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- -------------------------------- --- ---------------------------------------------------------------- -----------
<S> <C> <C> <C>
CLASS ONE
TERM ENDING 1998
George Krsek.................... 75 Managing Member, Konec, L.L.C., 1979
a management consulting firm
Jack O. Vance(3)................ 71 Managing Director, Management Research, 1988
a management consulting firm
Derek B. Lidow(1)............... 43 Chief Executive Officer of the Company 1994
</TABLE>
- ------------------------
(1) Alexander Lidow and Derek B. Lidow are sons of Eric Lidow.
(2) Mr. Burns is also a director of ESI Corporation and International Technology
Corporation.
(3) Mr. Vance is also a director of Vencor Corporation, International Technology
Corporation, Escorp, The Olson Company, University Restaurant Group, FCG
Enterpries, Inc., and Semtech Corporation. He was formerly a director of
McKinsey & Co., Inc., a management consulting firm.
The above named directors have held their respective employment positions
during the past five years except for George Krsek who was President of Houba,
Inc., a pharmaceutical firm, from 1975 to July 1994. Messrs. Mueller, Alexander
Lidow and Derek B. Lidow have been employed by the Company for more than five
years in various executive officer positions.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors has Audit, Compensation and Executive
Committees, but not a Nominating Committee. Both the Audit Committee and the
Compensation Committee currently consist of Messrs. Burns, Krsek, Plummer, Vance
and Vogt, each of whom is a director but not an officer or employee of the
Company ("Non-Employee Director"). The Executive Committee consists of Messrs.
E. Lidow, A. Lidow, D. Lidow, Mueller and Vance. The Audit Committee monitors
the Company's basic accounting policies, reviews audit and management reports,
and makes recommendations regarding the appointment of the independent auditors.
The Audit Committee held three meetings in the fiscal year. The Compensation
Committee has the responsibility for setting key executive compensation and for
granting stock options. (See "Compensation Committee Report" below). The
Compensation Committee met four times. The Executive Committee, formed in March,
1995, exercises many of the powers and authority of the Board in the management
of the business affairs of the Company. The Executive Committee met four times.
The Board of Directors met six times. An Ad Hoc Committee consisting of Messrs.
Vance, Burns, and D. Lidow was formed to review and present a Shareholder Rights
Plan to the full Board (which plan was approved on August 2, 1996). The Ad Hoc
Committee met two times. No director attended less than 75% of meetings of the
Board of Directors and of all committees on which he served during the fiscal
year.
Non-Employee Directors receive fees of $35,000 per annum for participation
on the Board and its Committees. Mr. Vance receives an additional $3,000 per
meeting of the Executive Committee ($12,000 for the fiscal year). Under the
current Stock Option Plan of 1992 (Amended) (the "Plan"), Non-Employee Directors
are automatically granted stock options for 5,000 shares of Common Stock on each
January 1 during the term of this Plan. In addition, each Non-Employee Director
elected after the 1994 Annual
5
<PAGE>
Meeting of Stockholders is automatically granted upon initial election an option
to purchase 40,000 shares. Each Non-Employee Director in office on August 9,
1994 was automatically granted, in addition to the option to purchase 20,000
shares granted to him upon initial Stockholder approval of the Plan, an option
to purchase 20,000 shares. Notwithstanding the foregoing, the aggregate number
of shares for which options may be granted to any Non-Employee Director under
both this Plan and the Stock Option Plan of 1984 cannot exceed 100,000 shares.
Non-Employee Directors are not eligible to receive any other options under the
Stock Option Plan of 1992 (Amended). Non-Employee Director options become
exercisable at the rate of 20% per annum commencing on the first anniversary of
the date of grant; vesting may accelerate upon death, voluntary resignation or
decision not to stand for re-election. (See Proposal 2 below to amend and
restate the Plan).
6
<PAGE>
EXECUTIVE COMPENSATION
The following table and accompanying notes summarize the aggregate
compensation paid by the Company and the stock option grants awarded to each of
the five highest paid executive officers for each of the last three fiscal
years.
SUMMARY COMPENSATION TABLE--ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
SALARY BONUS OTHER ANNUAL -------------
NAME AND PRINCIPAL POSITION FISCAL YEAR ($)(2) ($) COMPENSATION($) OPTIONS(#)(*)
- --------------------------------------------------- ----------- --------- --------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Eric Lidow(1) ..................................... 1996 639,700 420,000 -- -- (3)
Chairman of the Board 1995 627,008 420,000 -- 100,000
1994 557,200 110,000 -- 120,000
Alexander Lidow ................................... 1996 352,200 411,000 -- -- (3)
Chief Executive Officer 1995 345,277 411,000 -- 100,000
1994 307,200 60,000 -- 80,000
Derek B. Lidow .................................... 1996 352,200 411,000 -- -- (3)
Chief Executive Officer 1995 345,277 411,000 -- 100,000
1994 307,200 60,000 -- 80,000
Robert J. Mueller ................................. 1996 340,100 200,000 -- 20,000(3)
Executive Vice President--External Affairs and 1995 333,777 200,000 -- --
Business Development 1994 299,000 59,800 -- 30,000
Michael P. McGee .................................. 1996 225,700 197,000 -- 35,000(3)
Vice President, Chief Financial Officer 1995 221,316 197,000 -- --
1994 188,214 40,000 -- 30,000
</TABLE>
- ------------------------
(1) The Company entered into an executive agreement with Eric Lidow dated May
15, 1991. See "Executive Agreement" below.
(2) Base salaries for FY96 were the same as in FY95 for the above listed
executive officers. See "Compensation Committee Report" below. Each year's
salary includes an automobile allowance granted to key employees and an
amount reflecting a difference in pay periods.
(3) For information regarding options granted in fiscal year 1997 to executive
officers, see "Compensation Committee Report" below.
* Reflects two-for-one stock split which had a Record Date of December 1,
1995. All references below to stock option awards also reflect the split.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table and accompanying notes summarize options granted to each
executive officer of the Company in fiscal 1996 and projects potential
realizable gains at hypothetical assumed annual compound rates of appreciation.
There were no grants of SARs to the executive officers in fiscal 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
PERCENT OF TOTAL APPRECIATION FOR
OPTIONS OPTIONS GRANTED EXERCISE OPTION TERM(4)
GRANTED TO EMPLOYEES IN PRICE EXPIRATION --------------------
NAME (#)(1)(2) FISCAL YEAR ($/SH) DATE(3) 5%($) 10%($)
- ------------------------------------------- ----------- ----------------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Eric Lidow................................. -- -- -- -- -- --
Alexander Lidow............................ -- -- -- -- -- --
Derek B. Lidow............................. -- -- -- -- -- --
Robert J. Mueller.......................... 20,000 3.6% 23.81 11/19/05 299,480 758,940
Michael P. McGee........................... 20,000 3.6% 23.81 11/19/05 299,480 758,940
" "............................... 15,000 2.7% 16.75 3/24/06 158,010 400,428
</TABLE>
In addition, 501,825 options were granted to other employees of the Company.
Each Non-Employee Director was granted 5,000 options on January 1, 1996.
- ------------------------
(1) Options become exercisable at a rate of 20% per annum commencing on the
first anniversary of the date of grant.
(2) Under the terms of the Plan, stock options were granted as ten-year options
at market price. Options under the Plan may be exercised for specified
periods of time following the resignation, retirement or other termination
of employment with the Company or its subsidiaries or as a result of a
change in control of the Company. The Plan also permits the Compensation
Committee, which administers the Plan, to accelerate, extend or otherwise
modify benefits payable under the applicable awards in various
circumstances, including a termination of employment or change in control.
Under the Plan, if there is a change in control of the Company (as defined
in the Plan), all options become immediately exercisable.
(3) Subject to earlier termination in certain events related to termination of
employment.
(4) These values are solely the mathematical results of hypothetical assumed
appreciation of the market value of the underlying shares at an annual rate
of 5% and 10% over the full ten-year term of the options, less the exercise
price. Actual gains, if any, will depend on future stock market performance
of the Company's Common Stock, market factors and conditions, and each
Optionee's continued employment through the applicable vesting periods. The
Company makes no prediction as to the future value of these options or of
its Common Stock, and these values are provided solely as examples required
by the proxy reporting rules of the Securities and Exchange Commission.
8
<PAGE>
OPTIONS
The following table shows for each of the five highest paid executive
officers the shares acquired on exercise of options in fiscal 1996 and certain
required information regarding outstanding options held by them at the end of
fiscal 1996.
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-
OPTIONS THE-MONEY OPTIONS
AT FY-END(#) AT FY-END($)
---------------- -----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(5)
- ------------------------------------------ --------------- -------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Eric Lidow................................ 100,000 1,043,750(1) 68,000/152,000 500,250/966,000
Alexander Lidow........................... 70,000 503,125(2) 52,000/128,000 362,250/759,000
Derek B. Lidow............................ 42,000 301,875(2) 52,000/128,000 362,250/759,000
Robert J. Mueller......................... 20,000 201,250(3) 12,000/38,000 103,500/155,250
Michael P. McGee.......................... 14,400 188,400(4) 6,000/51,600 55,750/151,888
" ".............................. 1,000 7,187(2)
</TABLE>
- ------------------------
(1) Based on market value of $21.25 on the date of exercise.
(2) Based on market value of $18.00 on the date of exercise.
(3) Based on market value of $20.875 on the date of exercise.
(4) Based on market value of $20.75 on the date of exercise.
(5) Based on market value of $16.125 at the end of fiscal 1996, minus the
exercise price of "in-the-money" options. The exercise price of outstanding
options ranges from $5.50 to $23.81. These options are subject to the same
terms and conditions as options granted to other employees under the
Company's current stock option plan, including 20% annual vesting,
adjustment for change in control and expiration at or following termination
of employment.
EXECUTIVE AGREEMENT
The Company entered into an executive agreement with Eric Lidow dated May
15, 1991, providing for his continued employment with the Company for a six-year
period as Chief Executive Officer and President or in such other position as the
Board of Directors may determine. Following the six-year period of this
agreement, employment continues but either party may terminate the agreement
upon ninety (90) days written notice. The agreement provides for an annual
salary of $500,000, which may be increased at the discretion of the Board. It
was so increased in May 1992 to $550,000 and in August 1994 to $632,500. Upon
Mr. Lidow's retirement from the Company (or a change in control) he will receive
annual payments of 90% of his then current salary. Upon Mr. Lidow's death,
payments will be continued to his wife, if she survives him, in an amount equal
to two-thirds of his retirement benefits, for the remainder of her life. The
9
<PAGE>
agreement was amended on April 12, 1995 to provide that upon retirement Mr.
Lidow's pension would be based, in addition to his salary, on the average of the
prior three years' cash bonuses, if any. The pension would further be adjusted
annually to account for any increase in the Consumer Price Index. At fiscal 1996
year end Mr. Lidow was entitled to receive, upon retirement, $885,917 a year for
the remainder of his life and his wife would thereafter receive approximately
$590,611 a year for the remainder of her life. In connection with the executive
agreement $2,348,000 was expensed in the fiscal year.
TRANSACTIONS WITH MANAGEMENT/FAMILY RELATIONSHIPS
The Company leased two parcels of real property in El Segundo, California,
owned by Alexander Lidow and paid rent totaling $72,981 during the 1996 fiscal
year. One lease had a five-year term which expired July 31, 1995; the other
lease had a ten-year term expiring March 31, 1996, which was extended on a
month-to-month basis through June 30, 1996, when it ended. The Company no longer
leases any property from Alexander Lidow.
The following information contained under the captions "Compensation
Committee Report" and "Stock Price Performance" shall not be deemed "soliciting
material" or "filed" with the Securities and Exchange Commission and shall not
be deemed to be incorporated into any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934 in the absence of specific
reference to such captions and information.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
currently consists of the five Non-Employee Directors of the Company. The
compensation of the five executive officers who comprise the Executive Team, the
top management operating group of the Company, is determined by the Committee
(see "Executive Compensation" above). The Committee also reviews (but does not
set) the salaries of all other employees having annual compensation of $150,000
or more.
The Company's executive compensation program for the Executive Team includes
competitive base salaries, annual bonuses and stock options under the Company's
stock option plan. (See Proposal 2 below to amend and restate the Company's
current plan). The Committee's policy is to set base salaries generally within
the mid-point of the competitive range for similar positions in high technology
companies, based on information of a broad range of such companies obtained from
an independent survey of executive compensation. A cash bonus is a variable and
performance-reflective portion of the compensation package. In general, cash
bonuses are subjective, but the Committee takes into consideration such factors
as profitability in the particular fiscal year, Company stock performance,
outstanding achievements (for example in new product introduction), and
improvement in market share and industry position. Stock options are granted to
provide long-term incentives linked to an increase in the market price of
Company stock by awarding options at the fair market value on the day of grant.
Outstanding options become exercisable at a rate of 20% per annum commencing on
the first anniversary of the date of grant.
Alexander Lidow and Derek B. Lidow, after having previously been elected
Directors in 1994, were elected Chief Executive Officers on March 6, 1995, after
over 16 years of service in various managerial positions of increasing
responsibility. The Company has no employment contract with either officer. The
10
<PAGE>
base compensation of these officers is from the low to mid-point for
similarly-situated chief executive officers. A substantial part of their total
compensation package is made up of a performance-based cash bonus and stock
options. The cash bonus awards to Messrs. Lidow equaled their fiscal 1995
bonuses. In making the cash bonus and stock option awards the Committee took
into consideration the strong performance of the Company under their management
in fiscal 1996 as well as subjective elements. The compensation of these two
officers is maintained at the same level (see "Summary Compensation Table"
above) as a matter of policy.
Base salaries and bonus awards of the Executive Team for FY96 are listed
above under "Executive Compensation". The base salary payable to Eric Lidow is
described under "Executive Agreement" above. The Committee on August 27, 1996
granted the members of the Executive Team the following stock options: Eric
Lidow--123,000; Alexander Lidow--134,000; Derek B. Lidow--134,000; Robert J.
Mueller-- 40,000; and Michael P. McGee--40,000. In making the option grants and
bonus awards to the executive officers for FY96 the Committee took into
consideration the strong growth in the Company's revenues and earnings for the
fiscal year as well as subjective factors.
Because the amount of cash compensation paid to executive officers does not
significantly exceed one million dollars, the Company has not adopted any policy
with respect to Section 162(m) of the Internal Revenue Code of 1986.
Donald S. Burns Jack O. Vance
George Krsek Rochus E. Vogt
James D. Plummer
11
<PAGE>
STOCK PRICE PERFORMANCE
The following graph compares the Company's cumulative stockholder return on
its Common Stock (i.e., change in stock price plus reinvestment of dividends)
measured against the cumulative total return of the Standard and Poor's 500
Stock Index and Standard and Poor's High Technology Composite Index peer group.
The stock price performance shown in this graph, which assumes $100 was invested
on June 30, 1991, is not necessarily indicative of and not intended to suggest
future stock price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
JUNE 30 THE COMPANY S&P 500 S&P HIGH TECH
<S> <C> <C> <C>
1991 100 100 100
1992 52.46 113.41 106.15
1993 82.78 128.87 123.98
1994 98.36 130.68 134.27
1995 213.11 164.75 218.46
1996 211.48 207.59 260.30
</TABLE>
12
<PAGE>
AMENDMENT TO AND RESTATEMENT OF THE COMPANY'S
STOCK OPTION PLAN OF 1992 (AMENDED)
(PROPOSAL 2)
PROPOSED AMENDMENT TO THE STOCK OPTION PLAN OF 1992 (AMENDED)
The Company has long employed stock options to attract, motivate and retain
key employees, officers and directors who can contribute to the success and
growth of the Company and its subsidiaries. The plans have been designed to
provide these eligible persons with long term incentives to improve the
financial performance of the Company and to align their financial interests with
those of the Stockholders. The current stock option plan, the Stock Option Plan
of 1992 (Amended), was adopted by the Stockholders at the Annual Meeting in
November 1992 and amended at the Annual Meeting in November 1994 (the "1992
Plan").
The Board of Directors on August 27, 1996 approved the submission to the
Stockholders for consideration the herein proposed Amended and Restated Stock
Incentive Plan of 1992 (the "Restated Plan"). The full text of the Restated Plan
is set forth in the Exhibit to this Proxy Statement. The following summary of
the Restated Plan is qualified in its entirety by reference to that text.
SUMMARY OF THE RESTATED PLAN
The primary purposes of the Restated Plan are to broaden the types of
stock-based awards that may be granted (under the 1992 Plan only non-qualified
options may be granted), extend the term of the 1992 Plan for three years to
December 31, 2002, retain the provision for the annual increase in shares of the
Company's Common Stock available for grant of one and one-half percent (1 1/2%)
of outstanding shares, increase the maximum number of shares that may be granted
to Non-Employee Directors from 100,000 to 120,000 (including an annual grant of
5,000 shares to each such director), reduce the holding period for full vesting
of certain Non-Employee Director options from one year to six months, and
generally provide the committee of the Board of Directors that administers the
Plan with substantial powers and discretion.
Options to purchase shares under the Restated Plan may continue to be
granted to those present and future employees (including officers and employee
directors) of the Company or its subsidiaries selected by the Compensation and
Stock Option Committee of the Board of Directors (the "Committee") as persons
who contribute to the continued growth and development and financial success of
the Company or any of its subsidiaries.
The Restated Plan will extend the term of the 1992 Plan by three years from
December 31, 1999 to December 31, 2002; increase the number of shares available
for grant as a result of the annual increase of one and one-half percent
(1 1/2%) of outstanding shares on each January 1 during the six years of the
term of the Restated Plan; enhance the authority of the Committee to amend and
settle outstanding awards; include individual annual grant limits on aggregate
amount of stock options ("Options") and stock appreciation rights ("SARs"),
Incentive Stock Options ("ISOs") and other stock-based incentives and awards
("Awards") including performance-based awards that conform to the requirements
of IRS Regulations issued under Section 162(m) (the "162(m) Regulations") of the
Internal Revenue Code of 1986 (the "Code"); add provisions for performance-based
share awards under the Code other than options and SARs; and permit repricing of
options (but not below market on the date of repricing); and provide change
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in control and reorganization adjustment and antidilution provisions; and
eliminate obsolete restrictions based on former Rule 16b-3 of the Securities
Exchange Act of 1934 ("Rule 16b-3").
The exercise price of a non-qualified stock option or an ISO under the
Restated Plan may not be less than 100% of the fair market value of the stock on
the date the option is granted. Upon exercise of an option, the full purchase
price must be paid. Any shares subject to unexercised options that expire or are
terminated may be subject to grant of other options under the Restated Plan.
Restricted Stock awards may not be granted for less than par value of Common
Stock (i.e., $1 per share) and shall not exceed 5% of the Award granted under
the Restated Plan. Unless sooner terminated, the Restated Plan will expire on
December 31, 2002 if the amendment is approved by the Stockholders and December
31, 1999 if the 1992 Plan remains in effect, after which time no further options
may be granted, although options outstanding on such date may be exercised
according to their terms or may be amended consistent with the terms of the
Restated Plan.
ADMINISTRATION OF THE PLAN
The provisions governing employee options will continue to be administered
by the Committee which consists of no fewer than two "outside directors" (as
defined in Section 162(m) of the Code) appointed by the Board. The Committee may
determine and designate those employees (including officers and employee
directors) who are to be granted awards under the Restated Plan, the type and
number of awards, and the specific terms and conditions of the awards granted.
The Committee generally will have broad powers and discretion under the Restated
Plan, among which are to authorize and design various types of awards, to
prescribe the conditions and manner for payment (if any), to qualify awards as
ISOs, to provide for adjustments and, in various circumstances, to amend awards.
The Committee also has authority, subject to the express provisions of the
Restated Plan, to interpret and construe its provisions.
SHARES THAT MAY BE ISSUED UNDER THE RESTATED PLAN
As of September 27, 1996, there were under all of the Company's stock plans
2,323,035 options granted and outstanding and 444,790 shares available for
grant, representing approximately 5.4% of the outstanding shares of the
Company's Common Stock on that date. The maximum number of shares of Common
Stock that may be issued pursuant to options granted under the Restated Plan is
one and one-half percent (1 1/2%) of the number of shares of Common Stock
outstanding on January 1, 1993, increased each January 1 during the term of the
Restated Plan by a number equal to one and one half percent (1 1/2%) of the
number of shares of Common Stock then outstanding. As is customary in incentive
plans of this nature, the number and kind of shares available under the Restated
Plan are subject to adjustment in the event of a merger, sale of assets, or
other reorganization, consolidation, recapitalization, stock split, stock
dividend, or other similar events, or a dividend or distribution of property to
the Stockholders which affects the value of the Common Stock. Following receipt
of Stockholder approval, the Company plans to register under the Securities Act
of 1933 the additional shares available under the Restated Plan.
The Compensation Committee approved on June 21, 1996 a stock option program
for senior management (not including the Executive Team) for fiscal 1997, which
is intended to strengthen the link between the long term interests of senior
management and stockholders. Under this program, each participant may receive
for fiscal 1997 stock options having a target of 40% of base salary if certain
predetermined financial objectives for FY97 are met. The options, upon grant,
will in all respects be governed by the terms of the Company's then current
employee stock option plan. On June 21, 1996, the
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Committee awarded 150,000 options to 28 members of senior management
participants on the same basis as if the above described plan had been in
operation in fiscal 1996. There is no assurance, however, that this program for
senior management will be continued, or in what form, in later fiscal years.
EMPLOYEE OPTIONS
The Committee may grant one or more Awards to any officer or key employee of
the Company or any of its subsidiaries. No stock option granted to an employee
under the Restated Plan may be exercised more than ten years after the date it
is granted or such shorter period as the Committee may determine. The aggregate
limit on shares subject to grants of options and SARs that are granted and other
share-based awards that are made in any calendar year to any individual will be
200,000 shares. In the event an employee ceases to be employed by the Company,
the Committee may determine the effect of termination on the rights and benefits
under the options and in so doing may make distinctions based upon cause of
termination. Unless the Committee otherwise provides, upon a termination of
service, restricted or performance shares not then vested or issued, and Options
or SARs not then exercisable, typically will be forfeited or terminated, as the
case may be, in accordance with the terms of the related award agreements. The
grant of an option does not create in any recipient the right to continue to be
employed by or to provide services to the Company or a subsidiary.
NON-EMPLOYEE DIRECTOR OPTIONS
The provisions of the Restated Plan relating to options granted to persons
who are directors of the Company but not employees or officers of the Company
("Non-Employee Directors") are automatic and, to the maximum extent possible,
self-effectuating. Under the Restated Plan, Non-Employee Directors will be
automatically granted stock options for 5,000 shares on each January 1 during
the term of the Restated Plan. In addition, each Non-Employee Director elected
at or after the 1996 Annual Meeting of Stockholders will automatically be
granted upon initial election an option to purchase 40,000 shares.
Notwithstanding the foregoing, the aggregate number of shares for which options
may be granted to any Non-Employee Director under the Restated Plan and under
the Company's Stock Option Plan of 1984 shall not exceed 120,000 shares.
Non-Employee Director options will become exercisable at the rate of 20% per
annum commencing on the first anniversary of the date of grant, subject to
acceleration upon death, voluntary resignation or decision not to stand for
re-election. Non-Employee Directors will not be eligible to receive any other
options under the Restated Plan.
No stock option granted to a Non-Employee Director under the Restated Plan
may be exercised more than ten years after the date it is granted. In the event
of a Non-Employee Director's death, options held by such director shall fully
vest and remain exercisable for one year. If a Non-Employee Director voluntarily
resigns or decides not to stand for re-election after five consecutive years of
service on the Board, options held by such director for at least six months from
the date of grant will immediately become and remain fully exercisable for one
year. If a Non-Employee Director's service is terminated for any reason other
than death, voluntary resignation or decision not to stand for re-election after
five consecutive years of service on the Board (and the option is held for at
least six months), options held by such director will remain exercisable for
three months. The non-exercisable portion of such options will terminate upon a
termination of service of the director.
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TYPES OF AWARDS
Stock options authorized under the Restated Plan are rights to purchase a
specified number of shares of the Company's Common Stock at an exercise price of
not less than 100% of the fair market value of the stock on the date of grant
(or date of amendment of the exercise price, if any) during the period set forth
in the award agreement. A stock option may either be an option that is
non-qualified ("NQ") or an ISO. Stock options that are granted as ISOs will be
granted with such additional terms as may be necessary to satisfy the applicable
requirements of the Code.
SARS. SARs entitle the recipient to receive, upon exercise of the SAR, an
amount (payable in cash and/or stock or other property) equal to the amount of
the excess, if any, of the fair market value of a share of the Company's Common
Stock on the date the SAR is exercised (or some lesser ceiling amount) over the
base of a share of the Company's Common Stock on the date the SAR was awarded or
the exercise price of a related stock option. SARs may be granted on a
free-standing basis, in relation to a stock option or in "tandem" with a stock
option, such that the exercise of either the option or the SAR cancels the
recipient's rights under the tandem award with respect to the number of shares
so exercised.
RESTRICTED STOCK. Restricted stock is the Company's Common Stock issued to
the recipient, typically for minimal lawful consideration and subject to certain
risks of forfeiture and restrictions and limitations on transfer, the vesting of
which may depend on individual or corporate performance, continued service, the
passage of time or other criteria. Restricted Stock awards shall not exceed five
percent (5%) of the maximum number of Common Shares that may be granted under
the Restated Plan.
PERFORMANCE SHARES. A Performance Share Award entitles a participant to
receive payments if certain objectives set forth in the related Award Agreement
are met over a performance measurement period specified in the Award Agreement,
but not less than six months. These Awards may be paid in cash or in shares of
Common Stock or in a combination of Common Stock and cash, all as determined by
the Committee. The Committee may provide for full or partial credit of an Award
prior to completion of the performance cycle or the attainment of the
performance goal specified in the Award in the event of the participant's death,
retirement, disability, a Change in Control Event (as defined in the Restated
Plan) or such other circumstances as the Committee may determine. These awards
can take the form of performance restricted stock, bonuses, phantom stock or
other stock-based or indexed awards.
In addition to Awards under other provisions of the Restated Plan, the
Committee may grant Performance-Based Awards within the meaning of the 162(m)
Regulations based on stock price appreciation or stock value or the performance
of the Company or its operating units pursuant to such business criteria as net
earnings, cash flow, return on equity, on assets or on net investment, or cost
containment or reduction. Such Awards are earned and payable only if performance
reaches specific, preestablished performance goals approved by the Committee in
advance of applicable deadlines under the Code and while the performance
relating to the goals remains substantially uncertain. Performance goals may be
adjusted to mitigate the unbudgeted impact of material, unusual or nonrecurring
gains and losses, accounting changes or other extraordinary events not foreseen
at the time the goals were set. Before any Performance-Based Award is paid,
other than an Option or SAR, the Committee must certify that the material terms
of the Performance-Based Award were satisfied. The Committee will have
discretion to determine the restrictions or other limitations of the individual
Awards.
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STOCK BONUSES
The Compensation Committee may grant a stock bonus to any eligible person to
reward exceptional or special services, contributions or achievements on such
terms and conditions as determined from time to time by the Committee. The
number of shares so awarded shall be determined by the Committee. These stock
grants may be independent of, or in lieu of, a cash bonus. When granted in lieu
of awards otherwise payable in cash, the value of the Shares will typically be
their fair market value (discounted, if appropriate, to reflect any restrictions
on the shares). Options or other awards also may be granted in lieu of cash
bonuses.
AMENDMENTS
The Board may, at any time and in any manner, amend or terminate the
Restated Plan subject only to any Stockholder approval that may be required
under applicable law. No such action may materially impair rights under any
awards previously made thereunder without the recipient's consent. Certain
amendments permitted under the Restated Plan without further Stockholder
approval may increase the cost of the Restated Plan to the Company or change the
allocation of benefits under the Restated Plan.
The Restated Plan is not exclusive and does not limit the authority of the
Board of Directors or the Committee to grant other awards, in stock or cash, or
to authorize other compensation, under any other plan or authority.
FEDERAL INCOME TAX TREATMENT OF AWARDS
The following is a general description of current federal income tax
consequences to participants and the Company relating to nonqualified and
incentive stock options and certain other awards that may be granted under the
Restated Plan. This discussion does not purport to cover all tax consequences
relating to stock options and other awards.
NONQUALIFIED STOCK OPTIONS. An NQ issued under the Restated Plan will not
result in any taxable income to the Option holder or deduction to the Company at
the time it is granted. The Option holder generally will realize ordinary income
at the time of exercise equal to the excess of the then fair market value of the
shares received over the Option price. The amount of ordinary income recognized
by the Option holder is deductible by the Company in the year the income is
recognized. Upon a subsequent disposition of the shares, the Option holder will
realize short-term or long-term capital gain or loss. The Company will not be
entitled to any further deduction at that time.
INCENTIVE STOCK OPTIONS. An ISO does not result in any taxable income to
the Option holder or deduction to the Company at the time it is granted or
exercised, provided the Option is exercised no later than three months after
termination of employment for reasons other than death or disability (one year
after termination of employment because of death or disability) and the stock is
held for a period of at least two years after the date of grant and one year
after the date of exercise. The excess of the fair market value of the stock
received over the Option price is, however, includable in alternative minimum
taxable income at the time of exercise for purposes of determining liability for
the alternative minimum tax. The subsequent sale of the shares will generally
result in long-term capital gain on the excess of the sale price over the Option
price. If, however, the Option holder disposes of the shares within two years
from the date of grant or within one year from the date of exercise, the
difference between the fair market value of the
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shares at the date of exercise and the cost of such shares is taxed as ordinary
income (and the Company will receive a corresponding deduction) in the year the
shares are sold. Any additional gain will be taxed as a capital gain. The amount
of ordinary income is limited to the excess of the selling price over the amount
paid for the shares if the selling price is less than the fair market value of
the shares at the date of exercise. If the shares are disposed of at a loss
(sale price less than amount paid for the stock), the loss is a capital loss.
The current federal income tax consequences of other awards authorized under
the Restated Plan generally follow certain basic patterns: SARs are taxed and
deductible in substantially the same manner as nonqualified stock options;
nontransferable restricted stock subject to a substantial risk of forfeiture
results in income recognition by the recipient equal to the excess of the fair
market value of the stock over the purchase price (if any) only at the time the
restrictions lapse (unless the recipient elects to accelerate recognition as of
the date of grant); performance awards generally are subject to tax at the time
of payment; and unconditional stock bonuses are generally subject to tax
measured by the value of the payment received; in each of the foregoing cases,
the Company will generally have (at the time the participant recognizes income)
a corresponding deduction.
"PARACHUTE" INCOME RESULTING FROM EVENTS. If, as a result of the occurrence
of a change in control an Option holder's Options or SARs become exercisable,
the restrictions on Restricted Stock Awards lapse, or shares are issued pursuant
to Performance Share Awards, the Option holder or participant may be deemed to
have received "parachute payments". If the additional value received as a result
of acceleration exceeds a certain threshold amount approximating 300% of the
person's average annual taxable compensation over the five calendar years
preceding the year in which the change in control occurs, the excess of the
total of such amounts over such person's average annual taxable compensation
generally will be subject to a 20% non-deductible excise tax in addition to any
income tax payable. The Company will not be entitled to a deduction for the
payments that are subject to the excise tax.
SECTION 162(M) QUALIFICATION. Notwithstanding the foregoing discussion with
respect to the deductibility of compensation under the Restated Plan, the 162(m)
Regulations would render non-deductible to the Company certain compensation in
excess of $1 million paid in any one year to certain executive officers of the
Company, unless such excess compensation is "performance-based" (as defined
under applicable IRS regulations) or is otherwise exempt from the 162(m)
Regulations. The applicable conditions of an exemption for a performance-based
compensation plan include, among others, a requirement that the Stockholders
approve the material terms of the Restated Plan. Stock options and SARs (if
granted at an Option price of at least fair market value on the date of grant)
and certain (but not all) other types of Performance Share Awards that may be
granted to executive officers under the Restated Plan are intended to qualify
for the exemption for performance-based compensation under the 162(m)
Regulations. However, in light of uncertainties regarding its ultimate
interpretation, no assurances can be given that all compensation intended to so
qualify will in fact be deductible if the non-qualifying amount should, together
with other non-exempt compensation paid to an executive officer, exceed $1
million.
The above tax summary is based upon federal income tax laws in effect as of
October 1, 1996.
RECOMMENDATION
The affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote thereon is required for adoption of the Restated Plan.
Stockholders should note that because Non-Employee
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Directors will receive (subject to re-election and Stockholder approval)
additional options and accelerated vesting of outstanding options under this
proposal, all Non-Employee Directors have a personal interest in its approval.
However, members of the Board believe that the adoption of the Restated Plan is
in the best interest of the Company and its Stockholders. Accordingly, the Board
of Directors recommends a vote FOR this proposal.
INDEPENDENT ACCOUNTANTS
(PROPOSAL 3)
The Board of Directors, on the recommendation of the Audit Committee,
proposes that Coopers & Lybrand, independent auditors of the Company for many
years, be elected as independent auditors of the Company to serve until the
Annual Meeting of Stockholders in 1997. A representative of Coopers & Lybrand is
expected to be present at the Annual Meeting, will be given the opportunity to
make a statement if he so desires, and will be available to respond to
appropriate questions.
Although this appointment is not required to be submitted to a vote of the
Stockholders, the Board believes it is appropriate as a matter of policy to
request that the Stockholders ratify the appointment. If the Stockholders do not
ratify the appointment by the affirmative vote of a majority of the shares
represented either in person or by proxy at the Annual Meeting, the selection of
another independent auditor will be considered by the Board of Directors.
The Board of Directors recommends a vote FOR this proposal.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires that executive
officers, directors, and holders of more than 10% of a company's registered
class of securities file reports of their ownership of a company's securities
with the SEC. Based on a review of these reports, the Company believes that its
reporting persons complied with all applicable filing requirements, except one
report concerning the sale of 6,000 shares by Dr. George Krsek which was
inadvertently filed subsequent to the applicable due date.
STOCKHOLDER PROPOSALS FOR 1997
Eligible Stockholders' proposals for the 1997 Annual Meeting of Stockholders
of the Company must be received at the Company's office at 233 Kansas Street, El
Segundo, California 90245 no later than June 11, 1997.
NOTICE OF BUSINESS
For business to be properly brought before the Annual Meeting by a
Stockholder of record, the Stockholder must give notice in writing to the
Corporate Secretary. Such notice must be delivered to or mailed and received at
the principal executive office of the Company not less than thirty (30) days nor
more than ninety (90) days prior to the meeting.
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MISCELLANEOUS
Management does not know of any business to be presented other than the
matters set forth in the Notice of Meeting. However, if other matters properly
come before the meeting, it is the intention of the Proxies to vote in
accordance with their best judgment on such matters.
The expense of preparing, assembling, printing and mailing the Proxy and the
material used in the solicitation of Proxies will be borne by the Company. It is
contemplated that Proxies will be solicited principally through the use of the
mails, but the officers and regular employees of the Company may solicit Proxies
personally, by telephone or by special letter. The Company will reimburse banks,
brokerage houses, and other custodians, nominees and fiduciaries for their
reasonable expenses in forwarding proxy material to their principals.
A copy of the Annual Report of the Company for the year ended June 30, 1996,
including financial statements for the year then ended, is transmitted herewith.
By Order of the Board of Directors
Gerald A. Koris
Secretary
October 11, 1996
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EXHIBIT
INTERNATIONAL RECTIFIER CORPORATION
AMENDED AND RESTATED STOCK INCENTIVE PLAN OF 1992
1. Purpose of Plan
The purpose of this Amended and Restated Stock Incentive Plan (the "Plan")
of International Rectifier Corporation, a Delaware corporation (the "Company")
is to enable the Company and its subsidiaries to attract, motivate and retain
their employees and certain other individuals by providing incentives related to
equity interests in and the financial performance of the Company.
2. Persons Eligible Under Plan
Any person, including any director of the Company, who is an officer or key
employee of the Company or any of its subsidiaries (an "Eligible Person") shall
be eligible to be considered for the grant of an Award (as defined in Section 5
below) or Awards under this Plan.
3. Stock Subject to Plan
(a) (i) AGGREGATE SHARE LIMIT; INDIVIDUAL LIMITS. The maximum number of
shares of Company Common Stock, $1 par value per share ("Common Shares")
including ISOs that may be issued, is equal to one and one-half percent (1 1/2%)
of the number of shares of Common Shares outstanding on January 1, 1993,
provided, however, that on each January 1 thereafter, such maximum number shall
be increased by the number of shares equal to one and one-half percent (1 1/2%)
of the number of shares issued and outstanding on each such date, and such
maximum number, as so adjusted, shall constitute and be referred to as the
"Share Limit". Common Shares that are issued pursuant to Awards and subsequently
reacquired by the Company pursuant to the terms and conditions of such Awards
("Reacquired Common Shares") shall be available for reissue within the Share
Limit. Notwithstanding anything contained herein to the contrary, the aggregate
number of Common Shares subject to options and stock appreciation rights granted
during any calendar year to any individual shall be limited to 200,000 and the
maximum individual limit on the number of shares in the aggregate subject to all
Awards under this Plan granted during any calendar year shall be 400,000.
(ii) Restricted Stock awards granted under this Plan shall not exceed five
percent (5%) of the maximum number of Common Shares that may be issued pursuant
to all awards granted under this Plan.
(b) SHARE RESERVATION. No award may be granted under this Plan unless, on
the date of grant, the sum of (i) the maximum number of Common Shares issuable
at any time pursuant to such award, plus (ii) the number of Common Shares that
have previously been issued pursuant to Awards granted under this Plan, other
than Reacquired Common Shares available for reissue consistent with Section
3(a)(i) above or 3(c) below, plus (iii) the maximum number of Common Shares that
may be issued at any time after such date of grant pursuant to Awards that are
outstanding on such date, does not exceed the Share Limit.
(c) REISSUE OF AWARDS AND SHARES. Awards payable in cash or payable in
cash or Common Shares that are forfeited or for any reason are not paid under
this Plan, and Common Shares subject to Awards that expire or for any reason are
terminated and are not issued, as well as Reacquired Common Shares,
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shall be available for subsequent Awards under the Plan. If an Award is or may
be settled only in cash such Award need not be counted against any of the Share
Limits under this Section 3.
4. Administration of Plan
(a) THE COMMITTEE. With respect to Awards intended to satisfy the
requirements for performance-based compensation under Section 162(m) of the
Internal Revenue Code and regulations thereunder ("Section 162(m)"), this Plan
shall be administered by a committee (the "Committee") of the Board of Directors
of the Company (the "Board") consisting of two or more "outside directors" (as
this term is defined in Section 162(m)). As to other Awards, this Plan may be
administered by the Board or by a duly authorized committee of directors.
Transactions in or involving Awards intended to be exempt under Rule 16b-3 under
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"), as
amended from time to time ("Rule 16b-3"), may be duly authorized by the Board, a
committee of Non-Employee Directors (as defined in Section 6(a) below and
meeting the requirements for disinterested director of Rule 16b-3), or as
otherwise required or permitted under Rule 16b-3. Awards to Non-Employee
Directors can be made only pursuant to Section 6 below.
(b) POWERS OF THE COMMITTEE. Subject to the express provisions of this
Plan, the Committee shall be authorized and empowered to do all things necessary
or desirable in connection with the administration of this Plan, including,
without limitation, the following:
(i) adopt, amend and rescind rules, regulations and procedures relating
to this Plan and its administration or the Awards granted under this Plan;
(ii) determine which persons (other than Non-Employee Directors) meet
the requirements of Section 2 hereof for eligibility under this Plan and to
which of such persons, if any, Awards will be granted under this Plan;
(iii) grant Awards to persons determined to be Eligible Persons and
determine the terms and conditions of such Awards, including but not limited
to the number of Common Shares issuable pursuant thereto, the times (not
more than 10 years after the initial Award) at which and conditions upon
which Awards become exercisable or vest or shall expire or terminate, the
fair market value of the Common Shares or Awards from time to time and/or
the manner in which it will be determined, and (subject to applicable law)
the consideration, if any, to be paid upon receipt, exercise or vesting of
Awards; provided, that the fair market value of each non-qualified option or
ISO granted shall not be less than the closing sale price of the Company's
Common Shares reported for any applicable date on the New York Stock
Exchange-Composite Tape or, if there is no sale or such date, for the
preceding date upon which such a sale took place;
(iv) determine whether, and the extent to which, adjustments are
required pursuant to Section 8 hereof;
(v) interpret and construe this Plan and the terms and conditions of any
Award granted hereunder, whether before or after the date set forth in
Section 9; and
(vi) determine the circumstances under which, consistent with the
provisions of Section 9, any outstanding Award may be amended;
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which authority (except as to clause (ii) above) shall remain in effect so long
as any Award remains outstanding under this Plan.
(c) SPECIFIC COMMITTEE RESPONSIBILITY AND DISCRETION REGARDING
AWARDS. Subject to the express provisions of this Plan, the Committee, in its
sole and absolute discretion, shall determine all of the terms and conditions of
each Award granted under this Plan, which terms and conditions may include,
subject to such limitations as the Committee may from time to time impose, among
other things, provisions that:
(i) permit the recipient of such Award, including but not limited to any
recipient who is a director or officer of the Company, to pay the purchase
price of the Common Shares or other property issuable pursuant to such
Award, (or any applicable tax withholding obligation upon such issuance or
in respect of such Award or Shares), in whole or in part, by any one or more
of the following:
(A) the delivery of previously owned shares of capital stock of the
Company (including shares acquired as or pursuant to Awards) or other
property; and/or
(B) a reduction in the amount of Common Shares or other property
otherwise issuable pursuant to such Award;
(ii) accelerate the receipt of benefits pursuant to such Award upon the
occurrence of specified events including, without limitation, a change of
control of the Company, an acquisition of a specified percentage of the
voting power of the Company, the dissolution or liquidation of the Company,
a sale of substantially all of the property and assets of the Company or an
event of the type described in Section 8 hereof, or in other circumstances
or upon the occurrence of other events (including events of a personal
nature) as deemed appropriate by the Committee;
(iii) qualify such Award as an Incentive Stock Option;
(iv) extend the exercisability, term or vesting schedule of any or all
outstanding Awards, change the price of any or all outstanding Awards or
otherwise change previously imposed terms and conditions, in the specified
events described in clause (ii) above or in other circumstances or upon the
occurrence of other events (including events of a personal nature) as deemed
appropriate by the Committee, in each case subject to Section 10;
(v) authorize the conversion, succession or substitution of outstanding
Awards upon the occurrence of an event of the type described in Section 8,
or in other circumstances or upon the occurrence of other events as deemed
appropriate by the Committee; and/or
(vi) provide for automatic grants of Awards or successive Awards.
(d) BINDING DETERMINATIONS. Any action taken by, or inaction of, the
Company, the Board or the Committee relating or pursuant to this Plan shall be
within the absolute discretion of that entity or body and shall be conclusive
and binding upon all persons. No member of the Board or officer of the Company
shall be liable for any such action or inaction of the entity or body, of
another person or, except in circumstances involving bad faith, of himself or
herself.
(e) RELIANCE ON EXPERTS. In making any determination or in taking or not
taking any action under this Plan, the Board and the Committee may obtain and
may rely upon the advice of experts, including
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professional advisors to the Company. No director, officer or agent of the
Company shall be liable for any such action or determination taken or made or
omitted in good faith.
(f) DELEGATION. The Committee may delegate ministerial, non-discretionary
functions to individuals who are officers or employees of the Company.
5. Awards
(a) TYPES OF AWARDS. The Committee, on behalf of the Company, is
authorized under this Plan to enter into any type of arrangement with an
Eligible Person that is not inconsistent with the provisions of this Plan and
that by its terms, involves or might involve the issuance of (i) Common Shares,
(ii) an option, warrant, convertible security, stock appreciation right
(including limited stock appreciation right) or similar right with an exercise
or conversion privilege at a fixed or variable price related to the Common
Shares or other equity securities of the Company and/or the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other conditions, or (iii) any similar security with a value derived from the
value of the Common Shares or other equity securities of the Company. The
authorization of any such arrangement (including any benefits described in
Section 5(d)) is referred to herein as the "grant" of an "Award." The Committee
may authorize any officer (other than the particular recipient) to execute any
or all agreements memorializing any grant of an Award by the Committee under
this Plan. All Awards shall be evidenced by a writing memorializing the Award
and containing all the terms and conditions of the Award, executed on behalf of
the Company and by the recipient of the Award.
(b) FORM OF AWARDS. Awards are not restricted to any specified form or
structure and may include, without limitation, sales or bonuses of stock,
restricted stock, stock options, reload stock options, stock purchase warrants,
other rights to acquire stock, securities convertible into or redeemable for
stock, stock appreciation rights, limited stock appreciation rights, phantom
stock, dividend equivalents, performance units or performance shares, and an
Award may consist of one such security or benefit, or two or more of them in any
combination or alternative.
(c) PRICE; CONSIDERATION. Except as provided in the concluding proviso to
Section 4(b)(iii), Common Shares may be issued pursuant to an Award for any
lawful consideration as determined by the Committee, including, without
limitation, services rendered by the recipient of such Award, but shall not be
issued for less than the minimum lawful consideration.
(d) CASH AWARDS. The Committee shall have the express authority to create,
add or include a cash payment or benefit under this Plan, whether in lieu of, in
addition to, or as an Award or as a component of another type of Award.
(e) TRANSFER RESTRICTIONS. Unless the Committee otherwise expressly
provides, an Award shall be exercisable only by the recipient and shall be
nontransferable, except in the event of the death or incapacity of the
recipient. In the case of the recipient's death, the Award may be exercised by
or transferred to the person or persons designated or entitled by laws of
descent and distribution to succeed to rights of the decedent, and, in the case
of the recipient's incapacity, by the legal representative of the recipient. The
designation of a beneficiary to receive benefits or exercise rights in the case
of a recipient's death consistent with applicable law and the terms hereof shall
not constitute a transfer.
(f) TAX WITHHOLDING. Upon any exercise, vesting, or payment of any Award,
the Company shall have the right at its option to (i) require the recipient (or
his or her heirs, personal representatives or
24
<PAGE>
beneficiaries, as the case may be) to pay or provide for payment of the amounts
of any taxes which the Company or any subsidiary may be required to withhold
with respect to such transaction or (ii) deduct from any amount payable in case
the amount of any taxes which the Company or any subsidiary may be required to
withhold with respect to such cash amount. In any case where a tax is required
to be withheld in connection with the delivery of Common Shares under this Plan,
the Committee may grant (either at the time of the Award or thereafter) to the
Participant the right to elect, pursuant to such rules and subject to such
conditions as the Committee may establish, to have the Company reduce the
numbers of shares to be delivered by (or otherwise reacquire) the appropriate
number of shares valued at their then fair market value, to satisfy such
withholding obligation.
(g) SPECIAL PERFORMANCE-BASED SHARE AWARDS. Without limiting the
generality of the foregoing, and in addition to options granted under other
provisions of this Section 5, other performance-based awards within the meaning
of Section 162(m) ("Performance-Based Awards"), whether in the form of
restricted stock, performance stock, phantom stock or other rights, the vesting
of which depends on the performance of the Company on a consolidated, segment,
subsidiary, division, or station basis with reference to revenues, net earnings
(before or after taxes or before or after taxes, interest, depreciation, and/or
amortization), cash flow, return on equity or on assets or on net investment, or
cost containment or reduction, or any combination thereof (the "business
criteria") relative to preestablished targeted levels of performance (the
"performance goals"), may be granted under this Plan. The specific performance
goals must be approved by the Committee in advance of applicable deadlines under
the Code and while the performance relating to those goals remains substantially
uncertain. Performance goals may be adjusted to mitigate the unbudgeted impact
of material, unusual or nonrecurring gains and losses, accounting changes or
other extraordinary events not foreseen at the time the goals were set. Other
types of performance and non-performance awards may also be granted under the
other provisions of this Plan.
(i) MAXIMUM AWARD. In no event shall grants in any calendar year to a
participant under this Section 5 (g) relate to more than 200,000 shares.
(ii) COMMITTEE CERTIFICATION. Before any Performance-Based Award under
this Section 5(g) is paid, the Committee must certify that the material
terms of the Performance-Based Award were satisfied.
(iii) TERMS AND CONDITIONS OF AWARDS. The Committee will have discretion
to determine the restrictions or other limitations of the individual Awards
under this Section 5(g).
6. Non-Employee Director Options
(a) OPTIONS GRANTED TO NON-EMPLOYEE DIRECTORS. There shall be granted on
each January 1 during the term of this Plan (without any action by the Board or
Compensation Committee) to each Non-Employee Director then in office who is not
an officer or employee of the Company or a subsidiary of the Company (a
"Non-Employee Director") an Option to purchase 5,000 shares of Common Shares. In
addition, each Non-Employee Director elected after the 1992 Annual Meeting of
Stockholders has been or will be automatically granted, upon initial election,
an option to purchase 40,000 shares. Notwithstanding the foregoing and subject
to the adjustments provided by Section 8 of this Plan and Section 12 of the
Company's Stock Option Plan of 1984 (the "1984 Plan"), the aggregate number of
shares for which options may be granted to any Non-Employee Director under both
this Plan and the 1984 Plan shall not exceed 120,000 shares. Non-Employee
Directors will not be eligible to receive any other options under this Plan.
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<PAGE>
(b) OPTION PRICE. The Option Price of each Non-Employee Director Option
shall be 100% of the fair market value of a share of Common Shares on the date
of grant. The option price must be paid in full in cash upon exercise of the
Option.
(c) EXERCISABILITY. Each Option granted under this Section 6 and all
rights and obligations thereunder shall expire ten (10) years after the date of
grant and shall be subject to earlier termination as provided below. Each Option
granted under this Section 6 shall become exercisable at the rate of 20% per
annum commencing on the first anniversary of the date of grant and each
subsequent anniversary through the fifth anniversary.
(d) EFFECT OF TERMINATION OF DIRECTORSHIP. In the event of a Non-Employee
Director's death, an Option granted pursuant to this Section 6 held by such
Non-Employee Director shall immediately become fully vested and remain fully
exercisable for one year after the date of death or until the expiration of the
stated term of such Option, whichever first occurs. If, after at least five
consecutive years of service on the Board, a Non-Employee Director voluntarily
resigns or decides not to stand for re-election, then an Option granted under
this Section 6 held by such Non-Employee Director for at least six months from
the date of grant shall immediately become and shall remain fully exercisable
for one year after the date of such resignation or decision to step down or
until the expiration of the stated term of such Option, whichever occurs first,
and shall thereafter terminate. If a Non-Employee Director's services as a
member of the Board terminate for any reason other than death or, after five
consecutive years of service on the Board with such option held at least six
months, resignation or decision to step down, any portion of an Option granted
pursuant to this Section 6 which is not then exercisable shall terminate and any
portion of such Option which is then exercisable may be exercised for three
months after the date of such termination or until the expiration of the stated
term of the Option, whichever first occurs. Notwithstanding anything to the
contrary in this Plan, no Options granted under this Section 6 shall be
accelerated to a date less than six months after the Date of Grant of such
Option.
7. No Right to Employment
Neither the existence of this Plan nor the grant of any Award under this
Plan shall create in any grantee the right to continue to be employed by or to
otherwise provide service to the Company or a subsidiary.
8. Adjustments
If (a) the outstanding securities of the class then subject to this Plan
(the "outstanding shares") (1) are increased, decreased, exchanged or converted
as a result of a stock split (including a split in the form of a stock
dividend), reverse stock split, or the like or (2) are exchanged for or
converted into cash, property or a different number or kind of securities (or if
cash, property or securities are distributed in respect of the outstanding
shares), as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, or reclassification, or (b) substantially all
of the property and assets of the Company are sold, or (c) the holders of the
outstanding shares receive an extraordinary dividend (other than a regular cash
dividend or a stock dividend of an amount not greater than 10% of the previously
outstanding shares) or other extraordinary distribution in cash, property or
securities, then, unless the terms of such transaction shall otherwise provide,
the Committee shall make equitable, appropriate and proportionate adjustments in
(x) the number and type of shares or other securities or cash or other property
that may be acquired pursuant to Incentive Stock Options and other Awards
previously granted under this Plan, and (y) the maximum
26
<PAGE>
number and type of shares or other securities that may be issued pursuant to
Incentive Stock Options and other Awards thereafter granted under this Plan, and
(z) such other terms of Awards as necessarily are affected by such event.
9. Term of Plan
No Award shall be granted under this Plan after December 31, 2002. Although
Common Shares and/ or cash may be issued after that date pursuant to Awards
granted prior to such date, no Common Shares or cash shall be otherwise issued
under this Plan after such date. Notwithstanding the foregoing, any Award
granted prior to such date may be amended after such date in any manner that
would have been permitted prior to such date, except that no such amendment
shall increase the number of shares subject to, comprising or referenced in such
Award, or extend the final expiration date of the Award, or reduce (below the
fair market value of the date of the amendment) the exercise price of an Award.
10. Amendment and Termination of Plan and Awards
The Board may amend or terminate this Plan at any time and in any manner,
subject only to any stockholder approval that may be required under applicable
law. No amendment or termination of the Plan or change in or affecting any
outstanding Award shall deprive, in any material respect, the recipient, without
the consent of such recipient, of any of his or her rights or benefits under or
with respect to the Award. Adjustments contemplated by Section 8 shall not be
deemed to constitute a change requiring such consent.
11. Effective Date of Plan
This Plan shall be effective as of the date it has been approved by the
affirmative votes of the holders of at least a majority of the Common Shares of
the Company present, or represented, and entitled to vote at a meeting duly held
in accordance with applicable law.
12. Legal Issues
(a) COMPLIANCE AND CHOICE OF LAW; SEVERABILITY. This Plan, the granting
and vesting of Awards under this Plan and the issuance and delivery of shares of
Common Shares and/or the payment of money under this Plan or under Awards
granted hereunder are subject to compliance with all applicable federal and
state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions as
the Company may deem necessary or desirable to assure compliance with all
applicable legal requirements. This Plan, the Awards, all documents evidencing
Awards and all other related documents shall be governed by, and construed in
accordance with the laws of the state of incorporation of the Company. If any
provision shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan (subject to Section 12(b))
shall continue in effect.
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<PAGE>
(b) PLAN CONSTRUCTION.
(i) RULE 16B-3. It is the intent of the Company that this Plan and
Awards hereunder satisfy and be interpreted in a manner that in the case of
recipients who are or may be subject to Section 16 of the Exchange Act
("Section 16 Persons") satisfies the applicable requirements of Rule 16b-3
so that Awards (or transactions under Awards) to such persons that are
intended to be exempt thereunder will be entitled to the benefits of Rule
16b-3 and will not be subjected to avoidable liability thereunder. If any
provisions of this Plan or of any Award would otherwise frustrate or
conflict with the intent expressed above, that provision to the extent
possible shall be interpreted and deemed amended so as to avoid such
conflict, but to the extent of any remaining irreconcilable conflict with
such intent as to such Section 16 Persons in the circumstances, the
Committee may disregard such provision.
(ii) SECTION 162(M). It is further the intent of the Company that
Options or SARs or other performance-based Awards under this Plan granted to
persons who are executive officers or who become executive officers qualify
as performance-based compensation under Section 162(m) of the Code, and this
Plan shall be interpreted consistent with such intent. Any provision,
application or interpretation of this Plan inconsistent with this intent to
satisfy the standards in Section 162(m) of the Code shall be disregarded.
(c) NON-EXCLUSIVITY OF PLAN. Nothing in this Plan shall limit or be deemed
to limit the authority of the Board or the Committee to grant awards or
authorize any other compensation, with or without reference to the Common
Shares, under any other plan or authority.
28
<PAGE>
GRAPH DESCRIPTION: a map showing the Los Angeles area freeway system and
directions to the Company's Annual Meeting of Stockholders.
[CRC Map]
<PAGE>
INTERNATIONAL RECTIFIER CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING NOVEMBER 25, 1996
The undersigned hereby constitutes and appoints Eric Lidow and Gerald A.
Koris, and each of them, his true and lawful agents and proxies with full power
of substitution in each, to represent the undersigned at the Annual Meeting of
Stockholders of International Rectifier Corporation to be held at the HEXFET
America facility of the Company, 41915 Business Park Drive, Temecula,
California, at 10:00 a.m., Pacific Standard Time, on the 25th day of November,
1996, and at any adjournment thereof, on all matters coming before said meeting.
<PAGE>
Please mark
your votes as
indicated in /X/
this example
1. Election of Directors
Nominees: Alexander Lidow,
Robert J. Mueller, Rochus E. Vogt
VOTE FOR all nominees VOTE WITHHELD
listed above; from all nominees
/ / / /
VOTE WITHHELD from the following nominee(s)
________________________________________________
2. Proposed Amendment to and Restatement of the Company's Stock Option Plan of
1992 (Amended).
FOR AGAINST ABSTAIN
/ / / / / /
3. To ratify Coopers & Lybrand as independent auditors of the Company to serve
for fiscal year 1997.
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED
WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.
PLEASE MARK, SIGN, DATE, AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature of Stockholder__________________________________ Dated _________, 1996
This Proxy Must be Signed Exactly as Name Appears Hereon. Executors,
administrators, trustees, etc. should give full title as such. If signer is a
corporation, please sign full corporate name by duly authorized officer.
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT IN THE ENCLOSED POSTPAID ENVELOPE
